FSA delays PPI reforms
The Financial Services Authority (FSA), has announced a delay on its plans to reform the Payment Protection Insurance (PPI) market.
The City Watchdog said its consultation will be delayed by six weeks due to a heavy amount of criticism from the financial industry.
Under a PPI policy, an agreed sum of money is paid out each month to fully cover, or cover a percentage of the payment due on your mortgage or loan if you are unable to work, as a result of becoming unemployed or sick.
However, it was established last year that financial providers commonly boosted their profits by incorporating the cost of a one-off PPI premium into a loan.
Furthermore, many complaints were received after borrowers with PPI found themselves paying extra interest, while a significant number complained that they were unaware of having taken out the insurance policy.
As a result, it was found that millions of PPI policies were mis-sold and in September 2009 the FSA proposed a major overhaul of the rules.
Commenting on its announcement to delay plans, Dan Waters, of the FSA, said: “We are disappointed that the industry has responded so critically to our proposals but we remain 100% committed to bringing about genuine, lasting change in the PPI market.
“We do, however, recognise the importance in ensuring that genuine concerns have been listened to,” he added.
Consumer group, Which?, demanded that the FSA “stand firm”.
“After years of mis-selling and poor complaints handling by the industry, consumers want to see action on PPI, not more consultations,” said Peter Vicary-Smith of Which?.